Hong Kong-headquartered shipmanager, Fleet Management saw 18% growth in its managed fleet in 2016 despite a harsh shipping environment that saw massive increases in ship scrapping.
Fleet Management’s managing director Kishore Rajvanshy says: “Fleet Management continues to grow rapidly. Today we are running 406 ships. The last 12 months have been good for us. This time last year we had around 350 ships.”
Supported by its own growth story, the company rejects the increasing trend towards consolidation within the sector as the only way forward.
“For us the growth has been purely organic on the back of satisfied customers and a strategy to invest and reinvest in world class systems. Even so, we do expect to see further consolidation take place,” says Mr Rajvanshy.
Mr Rajvanshy thinks that small start-up operations in the sector – an operation with 1-10 ships are particularly vulnerable in the current climate.
“The small start-ups, as a phenomenon, will always be here. But these start-ups must aspire to grow. If they cannot manage that they tend to disappear very quickly. This is simply because of the resources required to cater to the new regulatory requirements within the industry. Many small ship managers are encouraged by the low barriers to entry. If they are good at their jobs they will grow quickly. If not they will sink, he says.
“Nowadays a ship manager would need 40-50 ships to subsist but at that size there may remain constraints that means you don’t have the resources to invest in further growth. This has been one of the reasons why we have seen increased merger and acquisition activity in the sector over the last 12 months or so,” he adds.
Fortunately, double-digit growth at Fleet Management has allowed it to build up its infrastructure and provide a seamless global service, but some industry-wide challenges remain.
“Availability of good quality crew continues to be a challenge,” says Mr Rajvanshy.
“We have a lot of initiatives to cope with this challenge including ambitious cadet training and engineer training programmes in which we have invested a lot of resources.
“At any given time we have around 400 cadets in our system. Every year we take on 150 new cadets, which helps cater to the growth, and the attrition as seafarers eventually look to shore-based work.” But to some extent we also need to look to the open market for seafarers during this period of rapid growth.